Pizza Inn likely defaulted on loan from Wells Fargo

Oct. 25, 2005

THE COLONY, Texas — Four-hundred-unit Pizza Inn disclosed it may be in default of a loan agreement with Wells Fargo Bank.

According to a regulatory filing, the troubled pizza chain informed the bank on Oct. 18, it believes it "has failed to comply with certain financial ratio covenants" contained in the Jan. 22, 2003, agreement. The agreement states that Wells Fargo can terminate Pizza Inn's revolving credit commitment or declare all outstanding principal and interest immediately due and payable.

Pizza Inn has requested Wells Fargo waive the event of default.

At present, Wells Fargo had not exercised any rights or remedies available to it under the loan agreement.

On Aug. 29, Pizza Inn entered into a $6 million revolving credit agreement with Wells Fargo that helped it avoid defaulting on a previously agreed-to $3 million line of credit.